Direct and indirect effects of perceived usefulness of loans on clients' intention to recommend financial service providers

Abstract

Financial service clients' recommendation behaviour has enormous influence on the market share and profitability of providers of financial service products. This paper examines the direct and indirect effects of perceived usefulness of loan services on clients' intention to recommend financial service providers (FSPs) in a developing country. Drawing on existing literature, a conceptual model was developed and validated with data from 371 loan clients in Ghana. The study involved a cross-sectional survey of loan customers of leading FSPs in Ghana. A partial least square structural equation modelling (PLS-SEM) was conducted using SmartPLS 3.1.7 for Windows. The results showed that perceived usefulness did not have direct influence on clients' intention to recommend FSPs; rather, it had significantly positive indirect effect on intention to recommend through the mediation of satisfaction and trust. The findings have implications for developing strategies for managing perceived usefulness of loan services to clients. While this study is limited in terms of generalisability of the findings in developing countries, it provides avenues for further research for modelling the consequence of perceived usefulness of financial service products.